KCS, TFM, Tex-Mex to merge

friscobob Apr 22, 2003

  1. friscobob

    friscobob Staff Member

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    KCS and TMM Announce Agreements Placing TFM, Texas Mexican Railway
    and The Kansas City Southern Railway Under Common Control


    KANSAS CITY, Mo.--(BUSINESS WIRE)--April 21, 2003--Kansas City
    Southern (KCS)(NYSE: KSU) and Grupo TMM, S.A. (Grupo TMM)(NYSE: TMM)
    today announced a series of agreements that have been approved by
    their respective boards of directors, that will, following shareholder
    and regulatory approval, place The Kansas City Southern Railway
    Company (KCSR), the Texas Mexican Railway Company (Tex-Mex), and TFM,
    S.A., de C.V. (TFM) under the common control of a single
    transportation holding company, NAFTA Rail, to be headquartered in
    Kansas City, Missouri. As part of the transaction, KCS will change its
    name to NAFTA Rail, which will trade on the New York Stock Exchange
    (NYSE).
    The common control of The Kansas City Southern Railway Company and
    the Texas Mexican Railway under NAFTA Rail would require approval of
    the Surface Transportation Board in the United States. Additionally,
    the acquisition of Grupo TFM shares by NAFTA Rail would require the
    approval of the Competition Commission and the Foreign Investment
    Commission in Mexico.
    "Common control of these three railroads, which are already
    physically linked in an end-to-end configuration, will enhance
    competition and give shippers in the NAFTA trade corridor a strong
    transportation alternative as they make their decisions to move goods
    between the United States, Mexico and Canada," said Michael R.
    Haverty, chairman, president, and chief executive officer of KCS. "KCS
    already owns KCSR and has significant investments in Tex-Mex and TFM,
    so these agreements are just a natural business progression offering
    KCS and Grupo TMM shareholders greater value through the operating
    efficiencies that will come from common ownership and control."
    Jose Serrano, chairman and chief executive officer of Grupo TMM,
    said: "These transactions will be pro-competitive and allow Mexico to
    strengthen its position in the North American economy. NAFTA Rail will
    provide a viable rail alternative, while still preserving existing
    competitive gateways at the border between Mexico and the United
    States."
    "I am very pleased that we have been able to complete these
    agreements and that they have been approved by the boards of both
    companies. We believe that the shareholders of both companies will
    benefit from bringing these three companies under common ownership,"
    said Serrano. "Both NAFTA Rail and Grupo TMM will continue to work
    closely together in the future and have agreed to enter into a
    marketing agreement to further our shared goals of providing
    end-to-end transportation for our customers."
    Mr. Haverty will serve as chairman, president, and chief executive
    officer of NAFTA Rail. Mr. Serrano will serve as vice chairman of
    NAFTA Rail and chairman of TFM, while also joining the NAFTA Rail
    board of directors along with Javier Segovia, president of Grupo TMM.
    The remainder of the 10-person board will be made up of existing KCS
    directors. Mario Mohar will remain as chief executive officer of TFM.
    Under the Grupo TFM acquisition agreement, TMM Mulitimodal, a
    subsidiary of Grupo TMM, will receive 18 million shares of NAFTA Rail
    representing approximately 22 percent (20% voting, 2% subject to
    voting restrictions) of the company, $200 million in cash and a
    potential incentive payment of between $100 million and $180 million
    based on the resolution of certain future contingencies.
    Grupo TFM owns 80 percent of the common stock of TFM and all the
    shares entitled to full voting rights. The Mexican Government owns the
    remaining 20% of TFM. TFM holds the concession to operate Mexico's
    Northeast Rail Lines for 50 years ending June 2047, and has the option
    to extend the concession for an additional 50 years. The TFM rail
    network consists of more than 2,600 miles of main track.
    KCSR will remain headquartered in Kansas City, Missouri; Tex-Mex
    in Laredo, Texas; and TFM in Mexico City.
     
  2. friscobob

    friscobob Staff Member

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    126
    PLease keep in mind that the company is a holding company- the entities of KCS, TexMex, and TFM will still be around. Also, the color of the diesels will be gray.
     
  3. friscobob

    friscobob Staff Member

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    April 21, 2003

    Special Edition: To KCS, TFM and Tex Mex Employees from Michael R. Haverty, Chairman, President & CEO of KCS

    Previous Article / Next Article / KCS News Menu

    The Kansas City Southern board of directors has approved KCS' entry into several agreements with Grupo TMM, our Mexican partner, and its subsidiaries that will, following shareholder and regulatory approval, bring The Kansas City Southern Railway Company, the Texas Mexican Railway Company and TFM under common control. The three railroads will be under the common control of a United States based holding company, NAFTA Rail, which will trade publicly on the New York Stock Exchange. The result of this combination will be a single, seamless railway system connecting the heartland of the United States with the industrial and economic center of Mexico. We believe this announcement is good news for our employees and shareholders, and that by joining together we will strengthen each company, enhance competition, and give shippers in the NAFTA corridor a new, stronger alternative.

    KCS and Grupo TMM plan on seeking shareholder and regulator approval as soon as possible. Placing TFM under the control of NAFTA Rail will require government approval by the Competition Commission and the Foreign Investment Commission in Mexico. In the United States, the Surface Transportation Board must approve NAFTA Rail exercising common control over The Kansas City Railway Company and the Texas Mexican Railway Company.

    Under this agreement, the KCS Railway will remain headquartered in Kansas City, Missouri; the Tex Mex in Laredo, Texas; and TFM in Mexico City. This announcement begins the important process of bringing our three related railroads under a single common ownership, while preserving each railroad's individual identity. We recognize that the corporate culture is very different between the U.S. and Mexican operations, and we will respect and preserve that cultural diversity.

    The management of the three companies will remain largely unchanged. I will serve as chairman, president and chief executive officer of NAFTA Rail and the Kansas City Southern Railway . Mr. Serrano will serve as vice-chairman of NAFTA Rail and chairman of TFM. Mario Mohar will remain as chief executive officer of TFM and Jim Riney will continue as general manager of the Tex Mex.

    What will change is our ability to serve our customers. Improved service, reliability and customer support capabilities will give us the ability to deliver a much higher-quality service.

    We will have an open line telephone conference call available to all employees at 3:00 P.M. Central Daylight Time on Monday, April 21st, 2003 to answer any questions employees may have concerning consolidation of our three railroads under common control. Please feel free to call in at 1-800-955-1795 (U.S. and Canada) and 001-800-514-7616 (International) to participate in this employee open line call.

    KCS, TFM and the Tex Mex continue our efforts to provide outstanding service to our customers and remain a solid, independent company in the future. This announcement continues that tradition and I hope you will share with me in the excitement that it brings to our companies.
     

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